On the first of January this year, the newest regulations for Airbnb and other short-term rental companies took effect in Boston.
The ordinance bans hosts from renting out commercial units, or units that they don’t live in. This is because, in theory, that practice takes away from the number of available housing units in Boston and increases rent prices.
The regulation has been heavily criticized by Airbnb, which has filed suit against Boston and against other cities that have implemented similar laws, such as New York, Miami Beach, and its hometown of San Francisco. The lawsuit claims that online companies should not be held responsible for its users, and argues that some requirements violate state and federal laws.
The company has also long maintained that the service is actually bolstering city economies. In 2014, Airbnb released a report saying the listings generated $51 million for the Boston economy. In response to a separate Massachusetts law to tax short term rentals, Airbnb told WBUR that hosts in the state earned over $256 million in 2018.
But data from Inside Airbnb suggest the majority of that revenue is still going to the illegal commercial units that were banned by the Boston ordinance.
As of February 2019 – the latest data available from Inside Airbnb – only 16% of the hosts in Boston are commercial operators.
But those commercial operators own 55% of the listings, which indicates that each operates many more listings than a residential host.
They also earn significantly more, at 62% of the total revenue received by all hosts in Boston.
Because Airbnb doesn’t share information about the hosts to Boston (a mandate that was part of the ordinance but is on hold because of the lawsuit) some of the data from Inside Airbnb are estimations based on information that is publicly available on Airbnb’s website.
For example, the revenue earned per host is estimated by looking at the number of nights that a unit is occupied per month. That figure is estimated by looking at the number of reviews that a listing has.
This method is conservative, since a host can still be commercial just by renting out one property or private room that isn’t their primary residence. The occupancy rate is also capped at 70 percent, although some units are probably operating for more nights than that.
Until Airbnb releases the data though, using estimations and information scraped from the website are what most studies use to analyze the company.
The lack of access to data also results in studies that are mixed on Airbnb’s effect on cities. For example, a 2018 paper by the National Bureau of Economic Research found that the impact of Airbnb on rent nationally is small – a 1% increase in Airbnb listings raises rents by 0.018%, and doubling the number of Airbnbs would raise rent by less than 2%. The study used web scraped data performed at irregular intervals between 2012 and 2016.
But a 2018 study on Airbnb activity in New York City by McGill University reported that Airbnb removed between 7,000 and 13,5000 housing units from the city’s rental market, and increased the rent by $380, or 1.4%, in the last 3 years. The study also found that commercial operators are only 12% of hosts but earn more than 28% of the revenue. The data was provided by a third-party firm that performed daily scrapes between 2014 and 2017.
In another example, a paper by a former White House National Economic Advisor reported that in 2014, only 18% of hosts weren’t listing their primary residence, according to the information provided by Airbnb.
But a 2017 paper from the University of Texas at Austin using web-scraped data found that 44% of hosts had more than one listing and receive 59% of the profit. The multi-unit host also had an average of 3.6 listings.
The data analyzed from Inside Airbnb also found that in February 2019, the average commercial host in Boston owned 2 properties and made $3245 a month in income. However, a significant outlier is a company called Sonder, which numbers are so much higher that it’s not shown in the chart. It operates in 18 cities including London, Rome and Montreal. They have a total of 328 properties in Boston and make an estimated total monthly revenue of $482,317.
Kara, a host who has 89 properties in Boston, operates in Fenway/Kenmore, Mission Hill, and Chinatown. But according to their host profile, they has 769 properties nationally, from New York City to Palo Alto. Although according to the chart she has a significant amount of properties, each unit is only getting an average of 1.7 reviews a month, which indicates that they are not getting booked often and results in a lower estimated monthly income.
Matthew has 39 properties in Boston, but each unit is getting reviewed much more often and results in a higher estimated monthly income.
Commercial hosts operate in every neighborhood in Boston, but are much more prevalent than residential hosts in areas such as Chinatown, the South End, and parts of Fenway.
The McGill University study of New York City’s Airbnbs found that neighborhoods that are majority white make more money than ones that aren’t, but that the areas with the fastest-growing number of rentals are mostly African-American, such as in Harlem and Bedford-Stuyvesant.
Although this new city ordinance in Boston is a step forward, it is clear that it hasn’t managed to eliminate the presence of commercial hosts, who are still receiving a disproportionate amount of revenue from short term rentals, and thereby exacerbating housing issues.